An EU VAT number is essential for customs clearance when shipping goods to Europe. In today’s article, we explore the meaning of VAT number, its necessity, and the process of obtaining one.
Table of Contents:
What is a VAT number?
A Value-Added Tax Identification Number (VATIN), commonly known as a VAT number, is crucial for various economic activities, including trade, import, and export. This unique numerical identifier distinguishes taxable businesses from non-taxable entities.
If you are shipping goods to and from the EU, you must have a valid EU VAT number. Even if the applicable VAT rate is zero, such as in intra-EU trades, you must still present your VAT registration number.
In addition, VAT regulations differ across EU countries, each issuing its VAT number. It means a business trading in multiple EU nations cannot use a single EU VAT number for all transactions. Instead, it should register for a VAT number in each country where it operates.
You can verify each VAT number on the official VIES (VAT Information Exchange System) website of the European Union.
The format of VAT numbers
VAT registration numbers typically begin with a 2-letter code representing the EU country, followed by 2-13 unique alphanumeric characters.
The format can vary depending on the specific country. Below are some examples:
- France: FR12345678901
- Germany: DE123456789
- United Kingdom (Non-EU): GB123456789
Applying for a VAT number in Europe
Essential documents for VAT registration
While the specific documents required differ by country, the following are commonly requested:
- Proof of tax registration in your business’s home country.
- Articles of Association (AoA) or Certificate of Incorporation for your company.
- Extract from the national company registrar confirming your business’s existence.
- Evidence of planned trade, such as commercial invoices or trade contracts.
- A Letter of Authority or Power of Attorney is needed if you appoint a local tax agent.
When do you need a VAT number?
According to the VAT Directive, you need an individual VAT number in the following cases:
- When you supply services subject to VAT, such as importing from non-EU countries
- When you trade goods between different EU member states (intra-community supply)
- When you receive services for which you must pay VAT
- When you provide services for which the end customer is responsible for paying VAT
Additionally, you should register for a DPP VAT number if your VAT-taxable turnover exceeds £85,000.
If you’re unsure whether you need to register for a VAT number, take the VAT Risk Assessment test.
Where do you need a VAT number?
As of 2024, more than 170 countries require VAT numbers for various goods and services.
This includes all 27 European Union countries which use the EU VAT number.
Other major economies, such as the UK, Australia, Canada, Russia, China, and India, also require a VAT number for importing goods and services.
Most Scandinavian and Latin American countries also utilize VAT.
For a complete list of countries and their VAT tax number formats, refer here.
Do I need a VAT number for Amazon FBA?
In most cases, yes, particularly when shipping to the EU or any other country where VAT is applicable.
However, it’s important to note that there is no unified Amazon FBA VAT number that can cover all EU nations. You will need a valid EU VAT number for each country if you sell goods in different European countries.
Fortunately, the EU sets a sales threshold limit for FBA sellers who are VAT-registered in a specific EU member country.
If your annual sales in a country fall below that threshold limit, you are not required to register for an EU VAT number in that country separately. In such cases, you can charge VAT depending on your domestic VAT identification number.
Consider this scenario:
Imagine you’re an Amazon FBA seller based in the UK looking to expand your sales to Germany.
If your sales in Germany stay below a certain threshold (say, $15,000), you can apply UK VAT tax rates to your sales in Germany without needing a separate German VAT number. Then, you remit the collected taxes to the UK tax authorities.
However, if your sales exceed this threshold, you must register for a VAT number in German and remit the tax collected from those sales to the German tax authorities. The tax rates will vary based on Germany’s VAT brackets.
Amazon marketplace hosts an extensive network of sellers throughout the EU. Consequently, Amazon requires businesses trading within the EU to have an EU VAT number before listing their products.
You can register for a VAT number through the Amazon Seller Central portal with the assistance of a third-party tax service provider. Here is a guide on how to get a VAT number on Amazon Seller Central.
Does importing into the US request a VAT number?
The United States does not need a VAT registration number for imported goods. Instead, the US imposes sales tax and other federal duties on imports.
Generally, importers need an Employer Identification Number (EIN) for goods into the US.
So, you don’t need to worry about VAT number registration if you’re exporting to or importing from the US.
Navigating the complexities of VAT numbers is essential for any business involved in international trade, especially within the EU. Once you grasp it, VAT streamlines the process of tracking tax liabilities related to shipping.
